Correlation Between Ethereum and Yorktown Small-cap

Can any of the company-specific risk be diversified away by investing in both Ethereum and Yorktown Small-cap at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ethereum and Yorktown Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ethereum and Yorktown Small Cap Fund, you can compare the effects of market volatilities on Ethereum and Yorktown Small-cap and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ethereum with a short position of Yorktown Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Yorktown Small-cap.

Diversification Opportunities for Ethereum and Yorktown Small-cap

0.52

Correlation Coefficient

Ethereum  Yorktown Small-cap

Very weak diversification

The 3 months correlation between Ethereum and Yorktown is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Yorktown Small Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yorktown Small Cap and Ethereum is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ethereum are associated (or correlated) with Yorktown Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yorktown Small Cap has no effect on the direction of Ethereum i.e., Ethereum and Yorktown Small-cap go up and down completely randomly.

Pair Corralation between Ethereum and Yorktown Small-cap

Assuming the 90 days trading horizon Ethereum is expected to under-perform the Yorktown Small-cap. In addition to that, Ethereum is 3.1 times more volatile than Yorktown Small Cap Fund. It trades about -0.2 of its total potential returns per unit of risk. Yorktown Small Cap Fund is currently generating about -0.05 per unit of volatility. If you would invest  1,570  in Yorktown Small Cap Fund on December 22, 2024 and sell it today you would lose (64.00) from holding Yorktown Small Cap Fund or give up 4.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Ethereum  vs.  Yorktown Small Cap Fund

Ethereum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ethereum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Ethereum shareholders.

Yorktown Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yorktown Small Cap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Yorktown Small-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ethereum and Yorktown Small-cap

The main advantage of trading using opposite Ethereum and Yorktown Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Yorktown Small-cap can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Yorktown Small-cap will offset losses from the drop in Yorktown Small-cap's long position.

The idea behind Ethereum and Yorktown Small Cap Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .